The secret behind Baofeng Technology: The Huawei factor cannot be ignored

Who is Baofeng Technology?

I know Baofeng Technology through its Baofeng Video Player software, but it is not used much now. My experience with Baofeng Video Player is that there is a 30-second advertisement before the actual program is played, and this time can be used to go to the bathroom. This simple experience is enough to summarize Baofeng Technology's business model, and also summarize its development challenges.

Official data shows that Baofeng Technology's development plan is "centered on product innovation" and seeks "business planning in three aspects: Internet video services, Internet advertising information services, and smart terminals." This is the typical "free + advertising" model in the Internet industry, which requires "using videos to attract users and placing advertisements to users to generate profits." But if users go to the bathroom when the ads are playing, this will reduce the effect of the placement and affect the company's revenue.

The threshold of the Internet video industry is very high. In addition to the national policy access, in order to gain a firm foothold in this industry, it is also necessary to have a large user scale, rich media resources, complete network facilities, a strong financial foundation, and an active innovation mechanism. Currently, there are more than ten companies in this industry. The relatively active companies include Xunlei Network, Tencent Video, Baidu 's iQiyi , PPTV, Alibaba's Youku/Tudou, and LeTV.

The future is bright, but the road is tortuous

According to data provided by iResearch, in 2014, China's Internet population exceeded 500 million, and the Internet advertising market exceeded 100 billion yuan, maintaining a 46% growth. This is a profitable market, but it also requires considerable investment, especially in technology research and development.

Internet video services are a technology-intensive industry. Video services themselves involve many cutting-edge technologies, such as video production, encoding and decoding, storage and transmission, wireless streaming media, etc., which are all patent/standard-intensive fields. Internet services involve even more standard patents: content storage, load balancing, access control, video transmission, data security, which are not only R&D-intensive fields, but also industries with high incidence of litigation. On the user side, control technology, display technology, push technology, and advertising are also hot topics in current R&D.

To survive in such a technological environment, active R&D investment is needed. In this regard, Baofeng Technology is not very keen on patents. Although it launched the Baofeng video player in 2003, it did not apply for patents until 2007. Before the launch, Baofeng Technology had submitted a total of 25 patent applications, 11 of which were authorized.

In patent analysis, the number of applications is usually used to represent the results of a company's R&D activities, and the number of authorizations is used to reflect the number of original results of the company. In this sense, Baofeng Technology's R&D investment and R&D capabilities are not dominant in the industry. Its patent advantage is not as good as Xunlei Network and PPTV (Shanghai Juli Media), and is only slightly stronger than Tudou (Tudou has merged with Youku and has been included in Alibaba's business map). Among Baofeng Technology's 25 patents, there is a utility model for "stereoscopic glasses" (belonging to its subsidiary Baofeng Magic Mirror), and a charging technology for Apple devices. The remaining patents are mainly video playback technology (such as improving video clarity, increasing zoom speed, enhancing image quality/loading speed, etc.) and advertising delivery technology (such as advertising publishing, interactive advertising, advertising embedding, etc.), totaling 15.

The patents of Baofeng Technology, Xunlei, Tudou, and PPTV are displayed by technology clusters, and it can be seen that Baofeng Technology (red) lags behind its competitors in all areas of its R&D. Xunlei Network has performed best in R&D activities, and with the soaring stock price, Baofeng Technology's market value has exceeded Xunlei's by 7 times. However, it is worth mentioning that among all the patents of Xunlei Network, 50 authorized patents are still valid, but they were mainly applied for in 2007-2008.

Huawei: A protective umbrella for the storm

Without the support of technological innovation, the development of Baofeng Technology will inevitably be frustrated in this technology-intensive and innovation-intensive industry. Take advertising technology as an example. Advertising business is the profit point of Baofeng Technology, but the traditional model of video patch advertising has poor delivery effect and poor user experience. If there is no innovation, it will lose users and market. However, Baofeng Technology's performance has not been affected by the lack of patent accumulation. The reason may be related to Huawei. Huawei is the initiator of Baofeng Technology and currently holds 3.89% of the shares, making it the fifth largest shareholder.

Huawei's patent reserve is second to none in China and also ranks among the best in the world. Generally speaking, people think that Huawei's patents are related to communication technology, but in fact Huawei also holds a considerable number of patent technologies in other fields. For example, in video advertising technology, Huawei holds more than 120 patents, ranking second in China after Microsoft. This will undoubtedly give Baofeng Technology more room for technology selection.

In addition, Huawei has accumulated nearly 3,600 patents in the field of Internet video, ranking third among all companies. This can greatly make up for the lack of patent technology of Baofeng Technology and provide a relaxed environment for the company's business expansion. The brand effect and scale effect brought by Baofeng Technology's video business expansion also complement Huawei's single status in the mobile phone business. For Huawei and Baofeng, this is a win-win outcome.

How long will the “storm” last?

On May 18, 2015, when Baofeng Technology welcomed another daily limit and its stock price exceeded 248 yuan, CEO Feng Xin described the strategy of "Global DT (Data Technology) Big Entertainment" to the media at the strategic conference. Baofeng Technology will break through the limitations of the video field and extend to "big entertainment" fields such as entertainment, games, animation, music, etc., and seek development in smart hardware, e-commerce and other fields. It plans to fully transform from an online video company to an Internet entertainment platform in the DT era. This is a great dream and the ultimate goal of many world-class companies.

But there is a problem. Technology-intensive industries are areas where patent lawsuits are frequent. Due to the lack of technological accumulation, it is usually difficult for new companies to gain a foothold. How can a company enter a patent-intensive field and gain a foothold? This is a challenge that tests the wisdom of the company's top management. In this regard, Apple is a good example. Before the official release of the iPhone smartphone in 2007, Apple had never been involved in the mobile phone field. However, with great technological innovation and thorough intellectual property protection, Apple defeated traditional old mobile phone companies and changed the landscape of the mobile phone market.

If Feng's great vision is to be realized and Baofeng Technology wants to soar in the clouds like it has in the past two months, it is far from enough to just maintain the innovation speed of "25 patents in 8 years". Baofeng Technology needs to show its investors something real and worthy. Of course, innovation requires funds, but for Baofeng now, money is no longer a problem.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.